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How do you form an Illinois corporation?
What are the requirements to incorporate a business entity?
In this article, we will break down the notion of Articles of Incorporation Illinois so you know all there is to know about it!
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Articles of Incorporation Illinois
To form a corporation in Illinois, either a C Corp, an S Corp, or a corporation in general, you will need to file your company’s articles of incorporation.
The articles of incorporation provide the essential information required by the State of Illinois to legally “form” and “create” your business entity.
There are many benefits to forming a corporation.
Particularly, a business founder, entrepreneur, or business owner can protect their personal assets against business debt, obligations, and liability by operating under a corporate entity.
In other words, if a business creditor sues the corporation, the shareholders cannot be personally held liable for the company.
This principle is called limited liability protection.
Before Filing State of Illinois Articles of Incorporation Filing
The State of Illinois offers anyone looking to incorporate a business the possibility to file their articles of incorporation online or by completing the necessary forms.
A domestic corporation in Illinois can file its articles of incorporation online by going to the CyberdriveIllinois website and clicking on the “Articles of Incorporation”.
Alternatively, you can file your articles the traditional way by completing the articles of incorporation form (Form BCA 2.10) offered on CyberdriveIllinois.com’s website.
Whether you use the online filing method or the Illinois articles of incorporation form, you will achieve the same result.
Typically, online applications will be processed faster than applications sent by mail.
Before you start the filing of your articles of incorporation in Illinois, the Secretary of State (SOS) presents some instructions to ensure that you get started on the right track.
You are asked to make sure that you have a corporate name, have a registered agent, define the corporate class of stock, define your company purpose, and identify the incorporators.
Corporations that are filed online will be given one class of stock called “common stock”.
All corporations formed in Illinois online using CyberdriveIllinois will be given the following purpose:
“The transaction of any or all lawful purposes for which corporations may be incorporated under the Illinois Business Corporation Act.”
Professional corporations, medical corporations, close corporations, or business corporations with a specific scope will not be able to use the Illinois online portal as they will need to have a specific purpose.
In Illinois, all corporations formed online will be assigned one class of stock called the “common stock”.
You’ll need to set the number of authorized common shares, number of common stock to be issued, and the monetary consideration the corporation will receive in exchange for issuing the stocks.
Any corporate incorporator or founder must be a “natural person” or an individual aged 18 years or more.
You need at least one incorporator to file articles of incorporation validly.
Not For Profit Corporation
A not-for-profit corporation cannot use the online portal to file its articles of incorporation.
In essence, non-profit corporations must file their articles of incorporation Illinois form the traditional way.
How To File Illinois Articles of Incorporation
Let’s look at how to file your incorporation papers in Illinois.
The first step is to select your corporate name.
All corporations must have a corporate name that is unique and different from other names registered in the State of Illinois.
Also, you must ensure that you include a company designation in your corporate name such as INC, CORP, CO, LIMITED, or LTD.
You can also use the terms Corporation, Company, or Incorporated in full.
Corporate Name Availability
You can verify the availability of your corporation name by doing an Illinois corporation search to ensure the name of your choice is available.
If you are interested, you can even reserve your corporate name for 90 days by submitting the Application for Reservation of Name (Form BCA 4.10).
Generally, for the State of Illinois to approve your corporate name, the entity name must be distinguishable from other corporate names, assumed names, DBAs, LLC names, or other business entity names registered with the state.
Also, your entity name must include the mandatory reference to “corporation” by using the words “corporation”, “incorporated”, “company”, “limited”, or their abbreviations.
File Articles of Incorporation
The next step is to file your corporation’s articles of incorporation with the Illinois Secretary of State.
For an online application, you can use the Illinois corporation articles of incorporation portal.
If you want to file by mail, you can use the IL articles of incorporation form.
The articles must include the following:
- Corporate name
- Corporate address
- Registered agent name
- Registered agent address
- Company purpose
- Number of shares authorized to be issued
- Consideration the company will receive to issue shares
- Incorporator name
- Incorporation address
Every corporation formed in Illinois must designate and appoint a registered agent.
A registered agent is a company or individual authorized to receive and accept legal documents on the company’s behalf.
If you appoint an individual, he or she must live in Illinois.
If you appoint a company, its articles must authorize it to act as an agent and it must have a physical address in Illinois.
Your articles of incorporation must outline information about the corporation’s stock structure.
The articles must contain a list of the class of shares and the number of shares authorized.
If you are creating more than one class of stock, you must define the characteristics of each class of stock such as their preference of other classes, their limitations, any restrictions, special rights, relative rights when compared to other classes of stock.
In the context of filing Illinois articles of incorporation, you should also prepare your internal company bylaws.
The bylaws are the internal rules based on which your company will be managed and governed.
The corporate bylaws are generally not filed with the Illinois SOC nor are they legally required.
However, it’s advisable to have them provide for the corporation’s foundational internal rules and allow those who deal with your company to consider you are operating a legitimate and serious business.
When a company is initially incorporated, the incorporator is the one signing the articles of incorporation.
Once the company is legally established, it must immediately appoint its directors serving on the company’s board of directors.
In Illinois, the incorporation will need to complete a “Incorporator Statement” naming the company’s initial directors.
The Incorporator Statement is typically not filed with the IL Secretary of State but should be kept in its internal records.
Following incorporation, the incorporator must hold the corporation’s first meeting, called the organizational meeting.
In this first board meeting, the following tasks are handled:
- The board of director will appoint the company officers
- The corporation adopts its bylaws
- The corporation selects its bank account
- The corporation’s fiscal year is established
- The corporation is authorized to issue stock
- The corporation’s official stock certificate is adopted
- The corporate seal is adopted
The corporate resolutions and documents signed at the board meeting should be kept in its minute book.
At the organizational meeting, the corporation can issue the stock certificates to its shareholders.
The stock certificates serve as proof that the shareholder owns shares in the company.
Every stock certificate will have the name of the shareholder, a certificate number, issuance date, description of the type of shares issued, and the signature of the company board or representative.
The State of Illinois publishes the fees associated with filing the articles of incorporation.
If you are using the online portal, here are the applicable filing fees for filing articles of incorporation Illinois:
- $150 for Routine Service
- $250 for Expedited Service in 24 hours ($150 filing fees + $100 expedited fee)
There is a franchise fee that will be assessed at a rate of $1.0 per $1,000 of paid-in capital represented in Illinois with a minimum franchise tax of $25.
Payments can be made in the form of a credit card.
After Filing Articles of Incorporation In Illinois
Employer Identification Number (EIN)
Every corporation must have an Employer Identification Number (EIN).
The EIN is a tax number assigned to the corporation by the IRS to ensure the tax authorities know with which business entity they are dealing.
You can file and obtain your EIN by going to the IRS website.
Illinois State Tax Identification Number
You should look at getting your Illinois state Tax Identification Number (TIN).
The State of Illinois offers a consolidated state tax registration application and it’s done through the Illinois Department of Revenue.
You’ll need the Form REG-1 called the Illinois Business Registration Application.
You have the option of filing this form online or by mail.
Illinois Business Licenses
Before you start doing business in Illinois, you must verify whether you need to obtain a business license or not.
Typically, the need to obtain a business license will be driven by where your corporation will be located and the type of goods or services it offers to the public.
As such, you may verify with your city or county to get more information on the need to obtain a business license in Illinois.
Business licenses can include:
- General business license
- Seller’s permit
- Professional license
- Food or alcohol license
- Building permit
- Zoning permit
- Signage permit
- Car dealer and remitter license
- Liquor license
- Occupational license
- Environmental license
There are many types of licenses and permits that your business may require.
Make sure you verify all state, county, and local government requirements.
Your articles of incorporation are filed and you’ve started doing business.
To keep your company compliant with the Illinois Secretary of State laws, you must file your corporation’s annual reports.
All corporations doing business in Illinois must file an annual report and pay the associated fees.
S Corporation Election
If you intend to make an S Corp tax election, you’ll need to file an additional form with the IRS.
In essence, by default, your corporation will be considered as a C Corporation for tax purposes.
Having a corporate entity pay taxes separately is the standard taxation for corporations where the company pays corporate taxes independently from its shareholders.
However, if you intend to have your company taxed as a pass-through entity (like a partnership), you must file an S Corporation tax election with the IRS.
In essence, an S Corp can avoid double taxation.
Consider using Form 2553 for an S-Corp Election with the IRS.
So, how do you get articles of incorporation in Illinois?
What are the forms that you need?
Let’s look at a summary of our findings.
IL Articles of Incorporation
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